All Forum Posts by: Dan Kennerson

 That can work. Is your dad able to be a guarantor of the loan? 

Other than additional time in construction (and the actual license), he doesn't have any additional relevant experience, and I will be exiting a flip shortly that would make me the better candidate financially for backing. My goal in this is to maximize the number of properties I can get when I'm reallocating my equity, hence the higher LTV.

As he's aging, he isn't working a lot anymore and as such also wouldn't likely want to add this risk. 

Posting a finished picture. 

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $125,000
Cash invested: $35,000
Sale price: $349,000

This property has not sold yet, but is on the market at $349k. We are presently discussing two offers.

I bought this house near the end of 2017 intending to fix it up and sell it quickly, not expecting the number of turns life would take me down before it was ready.

I fixed it to a livable state, and moved in pretty quickly, then was sidelined by a business opportunity and just lived in it for a few years.

Finally finished the renovations Summer 2022.

What made you interested in investing in this type of deal?

Fix and flips are my comfort zone, and living in a working zone is as well. My next step is to move into the BRRRR model and balance the cashflow with wholesaling and regular flips.

How did you find this deal and how did you negotiate it?

I found it driving by while working nearby, and it appeared to be under construction. I sent a letter that wasn't responded to. Then I posted a "Dan buys fixers" ad on craigslist and the owners of it responded. Turns out the previous owner had fallen off the house and broke both legs, and it had been sitting half repaired for ten years.

The owners wanted a price that was more than acceptable to me, so I only negotiated terms.

How did you finance this deal?

Owner finance, $10K down, interest only, with a balloon that is currently approaching deadline.

How did you add value to the deal?

I finished the rehab, and by occupying the only vacant house on the street, ended up chasing away some of the problems in the small neighborhood, benefiting everyone.

What was the outcome?

House is currently for sale for $349K. Original flip plan only had it selling for $279k, but the area appreciated with Work from home and the neighborhood not having a vacant house that was being squatted on.

Lessons learned? Challenges?

Lesson 1- Don't get distracted by shiny objects. Fixing a house is simple, yet somehow it's easy to make complicated.

Lesson 2- Money is definitely made when you buy. I could have bought the house and done nothing with it, and still sold it today for a significant profit.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I did most of the work on the house, and I'll wait until it sells to recommend my agent as it's my first time using her.

Quote from @Erik Estrada:

Quote from @Dan Kennerson:

Quote from @Erik Estrada:

Might be able to do a hard money loan at a higher leverage, but what’s the exit strategy?

 Hey Erik, 

I'm looking at this for a buy and hold. 

Hedge fund financing could work. What's your experience level?

 Interesting. 

I'm new to landlording, but want to find a good property manager for that anyways. 

My relevant experience is 15 years in construction and maintenance, my dad is a GC, and I've worked jobs with him and outside on my own since I could drive. 

Quote from @Erik Estrada:

Might be able to do a hard money loan at a higher leverage, but what’s the exit strategy?

 Hey Erik, 

I'm looking at this for a buy and hold. 

Hey Jason, 

thanks for the info. The mobiles are older, not new Manufactured homes. It's funny, when someone goes through these old units, I often think there's not much to disqualify it from being a "Ship of Theseus" if you will, but, lenders only look at the original year. 

Interesting that the problem is two on one lot, not that they're mobiles. I'll pick my loan broker's brain on that idea, I think I could split the lot but I'll have to check with the county. 

Good idea to look at a portfolio loan, I have the capital to lock this down quickly, and I could likely refi with a portfolio to return to the leverage I'm after. 

Thanks for the ideas! plenty to work with to try to make the deal happen. 

Hi BP,

I'm looking at a property with two mobile homes on foundations on a single lot. When I first found them, the price seemed to be too good to be true, and I've found why- no one seems to want to finance Mobiles on land without ~30% down. 

This property is C class, but in an area that I think is up and coming, the mobiles were recently renovated, and comparable rents are ~$1300/mo each, so $2,600/mo. Which in my mind is pretty great seeing as how the PITI should be in the ballpark of $2,000/mo. That ratio made me immediately think of DSCR, but they want 30% down specifically because they are mobile homes.

I could put 30% down, but would rather hold that cash in reserves and/or be able to buy more properties. 

Anyone have clever ideas for me here? Appreciate it!

Dan

@Bjorn Ahlblad

One is a yurt builder, the other is a recording studio.

I don't think the business matters, its a commercial complex where people aren't supposed to be living, technically speaking.

First step is always call the county or city, often they have the name on file and will tell you even if it's an entity. Not sure if they should, but often they do.

After that, the governing body that took the filing in should be able to look up the business owner.

Good luck!

I'm looking at a 4 unit commercial building with long term tenants with good history.

Only concern, two of the 4 tenants live in the Units and also run a business out of them. They have been in the units for 6 and 11 years.

Property is in northern California.

What kind of liability or legal issues might I be facing by allowing them to stay and live in the units if I buy the property? The local real estate lawyers won't even return my call, which makes me think it's a hornets nest, but it's a good ROI so I'm still very curious.

Thanks!